Virgin Mobile: More consolidation in cell market

Virgin Mobile is very concerned about the current U.S. economic condition. It’s having a direct effect on their customer base, which is low and middle income families and individuals. So you know they’re keeping up with the goings on. The bad news is that they’re not figuring things to get any better for at least another year. The good news is that they’re planning measures to make the company stronger in this time. And maybe these measures will have some beneficial long-term effects for consumers. The first idea CEO Dan Schulman mentioned was a reduced pricing scheme. Virgin isn’t prepared to take that route right now, but it’s something they’re considering if the situation becomes any worse. Clearly, Virgin isn’t talking a lot about this angle. You can’t blame them. The other thing he talked about was the rise of consolidation of communications companies. Bigger companies can harbor larger risks. This means buying better handsets and making improvements to network coverage. Then again, Virgin doesn’t have a whole ton of control over their network, since they lease it from Sprint.

“I do believe you’re going to see continued consolidation in this industry,” Schulman said. “That should not be surprising to anybody. Over the long term networks are commodities … What you need is more and more scale and more and more cost efficiencies.”

Consolidation could help Virgin compete on a higher level, though there is a clear barrier between the Big Four and the rest. No. 4 carrier T-Mobile has over 30 million subscribers, while No. 5 Alltel has just over 13 million. Virgin has just over five million subscribers.]]>